Before the July 9th tariff "deadline" arrived, US President Trump seemed to have completely lost patience in negotiating with Japan and directly announced the new tariff rate to be imposed on Japan next month.
According to CCTV News, on Monday, July 7th, Eastern Time of the United States, Trump posted a letter to Japanese Prime Minister Shigeru Ishiba and South Korean President Lee Jae-myung on social media platforms, stating that the United States will impose a 25% tariff on all Japanese and South Korean products starting from August 1st, 2025.
According to CCTV, Trump said in the letter that despite the huge trade deficits between the United States and South Korea and Japan, the United States still decided to continue cooperating with the two countries. However, the United States has decided to move forward on the premise of more balanced and fair trade. Trump said that the trade deficit has posed a major threat to the US economy and even national security, and therefore changes must be made. Starting from August 1, 2025, the United States will impose a 25% tariff on all products from South Korea and Japan. This tariff will be independent of various industry-specific tariffs. In addition, any attempt to circumvent the tariff by transshipment through a third country will also be subject to higher tariffs.
In the letter, Trump said that if companies from Japan or South Korea build factories in the United States or produce products there, they will be exempted from the new tariffs. He also warned that Japan and South Korea should not take retaliatory actions, otherwise they will be punished with higher tariffs from the United States.
According to CCTV, Trump said that companies choosing to build factories or produce products within the United States do not need to pay this tariff. In addition, if South Korea and Japan decide to raise tariffs on the United States, the United States will impose additional tariffs of the same magnitude on top of the current 25% rate.
After Trump announced new tariffs on Japan, the yen's exchange rate accelerated its decline at the beginning of the midday trading session in the US stock market, falling by more than 1% at one point. The USD/JPY exchange rate broke through 146.00 during the trading session and rose by more than 1% for the day. After Trump announced tariffs on five countries including South Africa, the US dollar against the Japanese yen once rose above 146.20, hitting a new high since June 23, with an intraday increase of more than 1.2%
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The South Korean won exchange rate also dropped by more than 1% during the trading session. The US dollar against the South Korean won broke through 1,380.30 in midday trading on the US stock market, hitting a new high since June 23 and rising by more than 1.3% intraday.
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The three major US stock indexes saw their losses widen, falling by at least about 1%. Subsequently, as Trump announced new tariffs on five other countries including South Africa, the three major indices hit their intraday lows during the trading session, all falling by more than 1%. The S&P 500 dropped by over 1.2%, the Nasdaq fell by 1.3%, and the Dow Jones declined nearly 670 points, or nearly 1.5%. At the close, both the Dow Jones and the Nasdaq fell by more than 0.9%, while the S&P 500 dropped nearly 0.8%. Japanese auto giants listed in the US saw a sharp decline. The ADRs of Nissan and Toyota both dropped by more than 4% during the trading session, closing down approximately 3.9% and 4% respectively.
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Trump threatened to impose a 30% or 35% tariff on Japan last week
Judging from the letter released by Trump on Monday, neither Japan nor South Korea has been able to negotiate to lower the equivalent tariffs that the Trump administration had previously decided to impose on the two countries.
According to CCTV News, on April 2 local time, the United States announced that it would impose a 10% "benchmark tariff" on all countries and a personalized higher "reciprocal tariff" on countries with the largest trade deficits in the United States. Higher reciprocal tariffs officially came into effect on April 9th. At that time, the United States decided to impose a reciprocal tariff rate of 24% on Japan and 25% on South Korea.
According to Xinhua News Agency, on April 2nd, Trump announced the imposition of so-called "reciprocal tariffs", which triggered a sharp drop in the US financial market. Under pressure from multiple sides, Trump announced on April 9 that he would suspend the imposition of high "reciprocal tariffs" on some trading partners for 90 days, but maintain the "benchmark tariff" of 10%. At the same time, he threatened that US trading partners need to complete negotiations with the US by July 8.
According to CCTV, after multiple rounds of consultations, the recent trade talks between Japan and the United States have reached a deadlock. Last Tuesday, July 1st, Trump once again complained that Japan had not purchased enough American cars, rice and other products, and threatened to raise tariffs on Japan.
CCTV mentioned that Trump said last Tuesday that he could impose tariffs of "30% or 35% or any figure we have determined" on goods imported from Japan. This is much higher than the equivalent tariff rate of 24% for Japan that he announced on April 2nd.
CCTV also mentioned that Japanese Prime Minister Shigeru Ishiba responded last Wednesday, saying, "We will do our utmost to safeguard our national interests," and pointed out that although many countries have trade relations with the United States, "Japan is the largest overseas investor of the United States." We have created a large number of jobs for the United States. What we value is investment rather than tariffs. We will continue to build on this foundation to safeguard national interests.